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Erickson addresses Pa. House, Senate appropriations committees

February 25, 2014

Erickson addresses Pa. House, Senate appropriations committees

HARRISBURG, Pa. – Penn State President Rodney Erickson addressed appropriations committees for both chambers of the Pennsylvania General Assembly on Feb. 25, urging lawmakers to keep the partnership between the University and the Commonwealth strong in the coming year.

Erickson and the leaders of the other state-related universities (the University of Pittsburgh, Temple University and Lincoln University) gathered Tuesday to speak with lawmakers about their universities’ funding needs.

“Penn State is the Commonwealth’s land-grant University, and we share a special relationship that has endured for more than a century and a half. We struggle increasingly to fulfill the land-grant mission of teaching, research and service, with limited public funding from the Commonwealth while serving 98,000 students,” Erickson said. “Where appropriations are concerned, we hope the Commonwealth will be able to turn the corner this year. We need to say that we are going to make an investment on the part of the people of Pennsylvania, and we need to say we’re going to stick with that until we at least get back to a place where we can keep our tuition increases moderate, keep the doors of opportunity open, and keep higher education affordable in Pennsylvania. If we do that, in the long run, it will pay big dividends for the Commonwealth.”

Gov. Tom Corbett’s $29.4 billion budget proposal, released Feb. 4, includes level funding of $214 million for Penn State’s education and general budget, which is used each year to offset the cost of tuition for Pennsylvania resident students; $15.6 million for Penn College and $9 million for the Penn State Hershey Medical Center. Corbett’s proposal includes $47.7 million for Penn State’s agricultural research and extension programs across Pennsylvania, an increase of $1.5 million that will partially offset the rising cost of operations.

Overall, the governor’s proposal includes a $286.5 million appropriation for Penn State. Penn State’s 2014-15 appropriation request sought $299.7 million, including a request for $10.7 million to be used for mitigation of future tuition increases, to ensure that Penn State students from all walks of life will continue to have access to a world-class education.

Erickson expressed understanding for level funding in the face of continued economic constraints; however, all four leaders said the continuation of the trend would be detrimental to Pennsylvania’s public institutions of higher education over time. They said flat funding would amount to cuts in the face of the ever-rising cost of doing business, in areas such as employee compensation and health care, retirement contributions and energy.

“Over the years, the members of the General Assembly have expressed an appreciation of the value of higher education and of the particular importance of Penn State and the other state-related universities to the welfare of the Commonwealth. It’s also clear that investing in higher education yields tremendous returns,” Erickson said. “We understand that state policy makers have many demands for limited taxpayer funds; however, over the past 20 years, the state’s commitment to higher education has not matched its commitment to other areas of the budget. This trend has created major challenges for our public institutions of higher education.”

“We don’t principally compete against each other,” University of Pittsburgh Chancellor Mark Nordenberg said of Pennsylvania’s state-related universities. “We compete in a national and international market. If we’re not funded at competitive levels, that is a disadvantage for us, but it is a disadvantage for the Commonwealth in the end as well. It does put us in a corner in terms of delivering to our students and delivering at an affordable cost.”

Despite the challenges, Erickson said Penn State remains strong, producing highly recruited, workforce-ready graduates in areas of strong demand. The University is in a unique position to serve citizens in all corners of Pennsylvania, with more than 98,000 students at 24 campuses in communities across the state and enrolled in the online World Campus.

Several lawmakers expressed concern about rising tuition rates. Erickson said the most recent tuition increase -- an aggregate increase of 2.76 percent for undergraduate students -- was the second lowest at the University since 1967. He said the University also is aggressively raising funds for scholarships. Penn State currently is in the latter stage of a major fundraising campaign, For the Future: The Campaign for Penn State Students, the largest component of which is scholarship support.

Erickson said the University is once again aiming to make the next tuition increase modest, but said the level of state support for the education and general budget would play a direct role in Penn State’s ability to do so.

“We’re working very hard to stay in the same zone where we have been in the last two years,” Erickson told the Senate Appropriations Committee. “But I have to tell you it’s getting harder and harder every year as we continue to forgo a number of expenses. For example, our list of deferred maintenance needs continues to grow. Competition for the best faculty is also increasing – we compete with the top 100-to-120 institutions in the country, and particularly the private institutions are becoming ever more competitive and aggressive now that we’re moving out of the recession.”

The proposed general support appropriation is just under 1996 levels, when the University educated about 20,000 fewer students. The increasing number of students combined with level funding for Penn State’s general support appropriation creates significant strain, Erickson said. To meet this and other challenges, Penn State has cut nearly $297 million in recurring costs from its operating budget, including nearly $124 million in cuts to recurring costs in the past five years alone.

Erickson said longstanding efforts to identify savings and efficiencies will continue at the University; Penn State’s 2014-15 budget plan includes an additional $38.2 million in planned internal reallocations, deferments and targeted expense reductions. Initiatives to identify areas of cost-savings and efficiencies continue through the work of the University’s Budget Planning Task Force.

Sen. Jake Corman, chair of the Pennsylvania Senate Appropriations Committee, said Pennsylvania’s institutions of higher education are among its greatest resources, and said he looks forward to working with the leaders of each state-related university as the budget process moves forward.

Bill Adolph, chair of the Pennsylvania House Appropriations Committee, expressed support for appropriations to the state-related universities, and acknowledged that state support for the institutions has been waning for years.

“I understand the appropriations have been stymied for many, many years, and we would like to turn that around as the economy gets better,” Adolph said. “Without a doubt, you are an asset to our Commonwealth, and we do appreciate it.”

Adolph, along with other lawmakers, also recognized both Erickson and Nordenberg for their service. Both leaders have announced their retirement this year; Penn State President-Elect Eric Barron will assume the role of president no later than May 12.

“I want to thank you, President Erickson and Chancellor Nordenberg, for your leadership, for your vision, and your dedication to the students of your universities. Pennsylvania as a state and the students of the Commonwealth are better off for having had both of you lead these universities,” Adolph said.

Senate and House lawmakers now must agree on a budget and present it to the governor for his signature by the end of the current fiscal year on June 30. The governor's full $29.4 billion budget proposal for the state is available here.